Greenlight’s David Einhorn is shorting innovation stocks like Cathie Wood’s
Greenlight Capital’s David Einhorn has had one of his best years ever with a stellar return of over 30%, thanks in part to his short position in a number of innovative technology stocks touted by growth investor Cathie Wood. The star hedge fund manager said his fund is up 36.6% in 2022, compared to a 19.4% loss for the S&P 500. Einhorn also said he’s still short some “bubble” names be. “2022 was an exceptionally good year,” Einhorn said in the new investor letter obtained by CNBC. “In many ways it was our best yet and most comparable to 2001, the year after the last tech bubble burst.” The standout performance came from a successful bet against the constituents of Wood’s flagship ARK Innovation ETF (ARKK). “In early 2021, we also identified an actively managed ETF of so-called ‘Innovations’ stocks, which we believed had significantly similar characteristics to our bubble names,” the letter reads. The investor announced that in February 2021 it had shorted a basket of the unnamed ETF with 9% of its capital. The basket is down 76% since its initial entry, and the cumulative positive impact on its return was 6.4% of capital, Einhorn said. While Einhorn didn’t mention “ARKK” by name in the letter, it’s very likely a reference to Wood’s flagship fund, which is the most notable active ETF focused on innovation and is down 66% in 2022. Currently, the ARK fund holds 29 names, with its components such as Invitae, Coinbase, Twilio, Unity Software, Roku, Teladoc, and Tesla down over 60% from their 52-week high. Greenlight didn’t immediately respond to CNBC’s request to confirm the ETF it was referring to. ARKK 1Y Mountain ARK Innovation ETF’s 1-year sell-off Einhorn said he created another “bubble” basket of 31 names totaling 6.5% of the capital last January. He defines a bubble stock as one that could fall at least 80% and still doesn’t look cheap after looking at the company’s financials and valuations. Einhorn said that bubble basket stayed in the portfolio, but he did cover some positions. All but one of those stocks have fallen since its entry into late 2022, with 24 of them down more than 70%, the manager said. “This has been a year in which many of those who have ridden the bubble have suffered losses, raising questions about whether the risks were worth it,” Einhorn said. On the long side, notable winners from Greenlight in 2022 included Atlas Air Worldwide, CONSOL Energy, Teck Resources and Merger Arb Play Twitter. Einhorn also announced that it initiated a new medium-sized long position in hospital and outpatient surgery center operator Tenet Healthcare during the fourth quarter. He said a Covid-driven sell-off created an attractive opportunity to participate in the company’s transformation. – CNBC’s Michael Bloom contributed to the coverage
https://www.cnbc.com/2023/01/17/greenlights-david-einhorn-is-shorting-innovation-stocks-like-those-held-by-cathie-wood.html Greenlight’s David Einhorn is shorting innovation stocks like Cathie Wood’s
